Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I can assure you that the vast majority of those holding physical bullion are NOT selling. There is very little available supply of gold or silver. If you are able to find some, the premium is so high you're not even on the same page as the spot price. Oh, and delivery is weeks, if not months away.
Where this is starting to explode is with the London and Comex exchanges as no one is able to take delivery of real bullion. They've changed the rules almost daily to block anyone from even thinking about taking delivery on a contract. [Silly rabbits, this is Paper gold not the real stuff.]
For years there has been a sizable number of people who believed the paper bullion market was a fraud and it was double and triple counting all the physical bullion supposedly backing it. They warned that if anyone actually tried to take delivery the system would implode. No gold in Fort knox, etc. This is what appears to be happening.
Now please don't lump me in with the latter conspiracy theory bunch. There is no plot or conspiracy. The reality is that everyone acts in their own self interest and if they are positioned to manipulate a market to their advantage- they will. You would and so would I.
I do think there is a LOT of double counting and there isn't nearly the correct amount of real bullion behind the paper bullion instruments that exist. Hell, at times there was more short interest than all the bullion that ever existed. However this is allowed under the rules by which we play the game.
I play the bullion market like any other market subject to artificial price controls. There's no difference. When the official price is higher than the price you feel your supply is worth, you either don't sell (supply shortages) or you increase the premium to the street price - if you legally can. Or both.
I watch the divergence between the spot price (paper) and the street price (spot + premium). This is my "canary in the coal mine", if you will. The greater the divergence the louder the canary's chirps. Think of it as a Fear index.
That little rascal is screaming his ass off right now.
Thanks @rono. From your post and the article you attached, holding IAU, as I do, may hold more risk than reward. Equities and then bonds... who needs another shoe to fall on their head?
It may be smart to take my paper-gold profits and watch the show for now. Something to ponder on a Sunday afternoon.
How in your opinion does this affect the miners? The article mentions some refiners closing down for the virus. How will this effect PM stocks in your opinion?
I love miners. Miners is good. They create supply. At kitco you can scroll down and find all the miners for gold. Go to kitco dot silver for those miners. For funds try for diversified PM funds that cover all the metals and stay with your favorite house.
@johnN, I've dealt with apmex.com for years for bullion although not exclusively. They're painless. To buy higher end coins, the clearing house is collectorscorner.com . These are mostly slabbed coins and you'll find the top 10-15 dealers listing their coins here. I'm very fortunate where I live here in mid Michigan because Liberty Coins is here and I've dealt with them for years. https://libertycoinservice.com/
Never, ever, ever buy anything off of TV. It's all marked up about 50% over common retail. Also, you CAN get some buys on Ebay but it's tough and you really have to shop and know your sellers.
Recieved this from Pat Heller of Liberty Coins. They are a bullion dealer for the months.
"This announcement was just received from the US Mint:
U.S. Mint Temporarily Suspends Production of Numismatic Products
Today we face ongoing uncertainty regarding nearly every aspect of life as we know it. Not surprisingly, this includes the U.S. Mint’s production facilities. We continue to produce our congressionally-mandated circulating coinage and bullion to support day-to-day commerce, but production of our numismatic products has been suspended for the time being."
While this is purportedly due to the virus (note they are still minting circulation coinage), there is also a dire scarcity in physical bullion.
@rono, so scarcity in physical bullion adds risk to ETFs like GLD and IAU. Am I connecting the dots correctly with this latest and earlier posts. Sorry for my naivety.
There are so many issues going on right now it's difficult to get a grasp of the situation. Because of the pandemic, there has been a flight to physical bullion that has outstripped supply. In addition, the market meltdowns and desire for cash has resulted in a massive selling of paper bullion particularly the ETFs. Coupled together, these have resulted in a huge divergence between the official spot price and the street price.
Add on that US mint stopped selling bullion AGEs and ASEs weeks ago and yesterday suspended all numismatic coin minting (proofs and sets).
Add to this that both the London market and COMEX have been changing their rules almost daily to prevent redemptions of gold and silver futures contracts to prevent anyone from trying to take delivery.
Geez, you add all this up and it really looks like there are severe supply shortages that cannot be corrected in the short term as many mines and refineries are shut down due to the virus.
Be careful with the bullion ETFs. I prefer CEF but check the tax implications of any bullion ETF as they are normally taxed at collectible rates. I own a little SLV but prefer physical bullion by about 9000%.
Most PM mutual funds consist of gold and silver miners and not bullion like the ETFs.
Frankly, I don't have any faith in the bullion ETFs. They consist of promises to pay based upon some bars in some vault. The problem is that everyone is basing their NAV value upon THE SAME DAMN BARS. There have been many recent occasions where the short interest in silver has exceeded the grand total amount of silver ever mined. Really?!?
My first preference is physical bullion and my second is mining stocks.
Comments
Author is a bit of a gold bug but spot on.
I can assure you that the vast majority of those holding physical bullion are NOT selling. There is very little available supply of gold or silver. If you are able to find some, the premium is so high you're not even on the same page as the spot price. Oh, and delivery is weeks, if not months away.
Where this is starting to explode is with the London and Comex exchanges as no one is able to take delivery of real bullion. They've changed the rules almost daily to block anyone from even thinking about taking delivery on a contract. [Silly rabbits, this is Paper gold not the real stuff.]
For years there has been a sizable number of people who believed the paper bullion market was a fraud and it was double and triple counting all the physical bullion supposedly backing it. They warned that if anyone actually tried to take delivery the system would implode. No gold in Fort knox, etc.
This is what appears to be happening.
Now please don't lump me in with the latter conspiracy theory bunch. There is no plot or conspiracy. The reality is that everyone acts in their own self interest and if they are positioned to manipulate a market to their advantage- they will. You would and so would I.
I do think there is a LOT of double counting and there isn't nearly the correct amount of real bullion behind the paper bullion instruments that exist. Hell, at times there was more short interest than all the bullion that ever existed. However this is allowed under the rules by which we play the game.
I play the bullion market like any other market subject to artificial price controls. There's no difference. When the official price is higher than the price you feel your supply is worth, you either don't sell (supply shortages) or you increase the premium to the street price - if you legally can. Or both.
I watch the divergence between the spot price (paper) and the street price (spot + premium). This is my "canary in the coal mine", if you will. The greater the divergence the louder the canary's chirps. Think of it as a Fear index.
That little rascal is screaming his ass off right now.
Please people, buckle TF up. This is Not a drill.
And so it goes
Peace and Flatten the Curve
Rono
Now Here is a gold bug.
https://goldswitzerland.com/dont-wait-for-the-storm-to-pass-learn-to-dance-in-the-rain/
Don't know about you good people, but equating this to the Fall of the Roman Empire seems to be setting the Bad Outcome parameter.
And so it goes
Peace and Flatten the Curve
Rono
It may be smart to take my paper-gold profits and watch the show for now. Something to ponder on a Sunday afternoon.
How in your opinion does this affect the miners? The article mentions some refiners closing down for the virus. How will this effect PM stocks in your opinion?
I love miners. Miners is good. They create supply. At kitco you can scroll down and find all the miners for gold. Go to kitco dot silver for those miners. For funds try for diversified PM funds that cover all the metals and stay with your favorite house.
And so it goes
Peace and Flatten the Curve
Rono
What websites do you buy/sell your coins
Friend told us to use, had great experience previously with apmex
https://www.apmex.com/sell-gold-sell-silver-overview
We still have ed gld but only 0.5% of portfolio
Thx
@johnN, I've dealt with apmex.com for years for bullion although not exclusively. They're painless. To buy higher end coins, the clearing house is collectorscorner.com . These are mostly slabbed coins and you'll find the top 10-15 dealers listing their coins here. I'm very fortunate where I live here in mid Michigan because Liberty Coins is here and I've dealt with them for years. https://libertycoinservice.com/
Never, ever, ever buy anything off of TV. It's all marked up about 50% over common retail. Also, you CAN get some buys on Ebay but it's tough and you really have to shop and know your sellers.
good luck,
rono
Recieved this from Pat Heller of Liberty Coins. They are a bullion dealer for the months.
"This announcement was just received from the US Mint:
U.S. Mint Temporarily Suspends Production of Numismatic Products
Today we face ongoing uncertainty regarding nearly every aspect of life as we know it. Not surprisingly, this includes the U.S. Mint’s production facilities. We continue to produce our congressionally-mandated circulating coinage and bullion to support day-to-day commerce, but production of our numismatic products has been suspended for the time being."
While this is purportedly due to the virus (note they are still minting circulation coinage), there is also a dire scarcity in physical bullion.
And so it goes
Peace and Flatten the Curve
Rono
Hope this finds you well.
There are so many issues going on right now it's difficult to get a grasp of the situation. Because of the pandemic, there has been a flight to physical bullion that has outstripped supply. In addition, the market meltdowns and desire for cash has resulted in a massive selling of paper bullion particularly the ETFs. Coupled together, these have resulted in a huge divergence between the official spot price and the street price.
Add on that US mint stopped selling bullion AGEs and ASEs weeks ago and yesterday suspended all numismatic coin minting (proofs and sets).
Add to this that both the London market and COMEX have been changing their rules almost daily to prevent redemptions of gold and silver futures contracts to prevent anyone from trying to take delivery.
Geez, you add all this up and it really looks like there are severe supply shortages that cannot be corrected in the short term as many mines and refineries are shut down due to the virus.
Be careful with the bullion ETFs. I prefer CEF but check the tax implications of any bullion ETF as they are normally taxed at collectible rates. I own a little SLV but prefer physical bullion by about 9000%.
Most PM mutual funds consist of gold and silver miners and not bullion like the ETFs.
Frankly, I don't have any faith in the bullion ETFs. They consist of promises to pay based upon some bars in some vault. The problem is that everyone is basing their NAV value upon THE SAME DAMN BARS. There have been many recent occasions where the short interest in silver has exceeded the grand total amount of silver ever mined. Really?!?
My first preference is physical bullion and my second is mining stocks.
Take care
Rono